Listed infrastructure has generated attractive returns in recent years, says Lonsec – but there is a diversity of returns between different sub-sectors.
Based on common benchmarks, the infrastructure sector looks to have delivered reasonable returns, according to Lonsec Research senior analyst Nick Thomas.
However, a closer look at sub-sectors individually reveals a “significant dispersion in returns”, Mr Thomas said.
“The [entire] sector returned 14.5 per cent for the year to September 2016 ... but hidden behind these figures is a range of different sub-sectors with their own esoteric risk factors, and varying degrees of sensitivity to some of the macro-economic developments we have seen over the past 12 months,” he said.
For example, the airports and utilities sub-sectors were among the strongest performers at the beginning of the year but later came under pressure, Mr Thomas said.
Conversely, infrastructure related to the energy sector began the year poorly but has since rebounded off the back of improving commodity prices, he said.
“Worsening conditions for the energy sector, and concerns about US macro-economic conditions, led to substantial losses for fund managers with significant exposure to rail and pipeline infrastructure,” Mr Thomas said.
“However, these have recovered to some extent in more recent times. This really highlights the lack of homogeneity within the listed infrastructure sector, and can have implications when it comes to measuring portfolio performance.”